Asset Management, Part Two

In "Asset Management, Part One" (May 1998) I introduced the topic of IT assets and pointed out some common ways organizations mismanage them. I also explained how companies lose money by purchasing items they already own and underusing equipment they've already purchased. Both practices shrink the value of an organization's IT dollar.

This month I'll offer you a quick guide for putting together an IT asset management system, and I'll also take a quick look at the asset management market and offer you some tips for managing IT assets (see "Best Practices for Asset Management").

Building The Basic System

Putting together an asset management system requires three steps. First, you need to create a database to house information about your organization's IT equipment. Second, you need to set up a process in which you inventory and track IT equipment and enter this data into the asset database. Third, you need to analyze this data so that it becomes a resource for evaluating the status of your IT equipment, informs your decision-making about how best to use the equipment, and helps you purchase the appropriate types and amount of new equipment.

To build a database that serves as an information repository for your organization's IT equipment and software, you need to identify each piece of equipment that enters your organization with an entry that contains such descriptions as the vendor name, product name , model number, and unique identification. You also might want to append each entry with additional information, such as the item's purchasing price, the date it came in, and other specific information. For instance, for a computer you might want to note its BIOS, any important enhancements it contains (such as RAM), and so on. For software, you might want to note the version number and whether it's Y2K-compliant.

Once you have your database's parameters worked out, you need to populate it by inventorying your equipment. The best place to start is in your receiving room (or whichever department handles new and incoming equipment at your organization). Besides noting what equipment is on its way, you also need to invest some time in marking or tagging the equipment when it arrives. Some organizations use bar code labels, which can save money in data-entry labor.

For equipment such as hubs, tagging is easy. But for other types of equipment, the process is more complicated and requires more attention. For instance, when you tag a new PC, you also need to tag any additional assets it houses , such as hard disks and extended memory. By marking these components and noting the system in which they reside, you can retrieve and reallocate them when you retire the system. The same is true for modems, network interface cards, and, of course, keyboards and monitors .

Tagging also helps you track equipment's movement within your organization. According to several studies, organizations tend to underestimate the amount of equipment they actually own. (For instance, according to Hewlett-Packard, one of its customers estimated that it owned 700 PCs. After conducting an actual count, the company discovered it had 1,200 PCs.) As a result, organizations often buy more equipment than they need.

Especially in large organizations, it's easy for equipment to fall through the cracks. Think about a computer's life cycle. Typically, it changes hands, locations, and functions numerous times. By tracking the PC, you know where it is and who is using it. Conversely, you know whether it's being underused or misused.

Inventorying incoming equipment and putting that information into a database is not a one-time deal. Rather, you need to establish a process by which all incoming equipment is entered into the database and then tracked throughout its life cycle in the organization.

After you've established your inventory process and entered your new equipment's information, you need to turn your attention to those assets you already own. The reason for starting with new equipment is that machines have life cycles within organizationsyou don't want to waste time marking equipment that's on its way out the door. So, when inventorying equipment already in use, be sure to work your way backward from recent purchases to older gear.

Extending Your System

Knowing what equipment your organization owns is valuable information, but you can extend the value of this knowledge by keeping track of other data points with each item entry. For example, you could include information about where equipment is being used, who is using it, and how. Doing so helps your organization get the most out of its assets. Say you have a set of PCs, each with 128Mbytes of RAM, being used by data-entry staff. You can perhaps make better use of the RAM by reallocating some of it to other PCs in your organization that need upgrades (while leaving the data-entry staff's systems fully functional).

The more information you keep on each item, the more analysis you can perform on your IT assets. For instance, for software you might want to keep track of who has a license for a particular application. Then, by metering the application's usage, you know how many copies are being used. By analyzing this information, you can make more accurate purchasing decisions when investing in upgrades. For instance, if many licenses are not being used, you could scale down your order and allocate the remainder of your budget to other areas.

Overall, it's wise to keep track of how much money you've spent on a product during its lifetime. Say you buy a set of PCs that, over time, require additional investments in service and upgrades. If you keep track of how much money you spend on each PC over its lifetime, you know better what your total cost of ownership is for each one. With this information, you know which PCs offer the best price and performance, which brands and models cost more than you thought, which ones require the most repairs , and so on. When it's time to invest in a new set of PCs, you can make better purchasing decisions, as well as more accurate forecasts for your IT budget.

At its most advanced employment, an asset database also contains information about IT- related leases, contracts, and warranties. Keeping track of this data will give you a clearer picture of the contracts and services you have invested in, and how they are being used by your company.

Using The Data

The primary benefit of an asset management systemand the main justification for investing the time and money to build oneis the information it provides about how your organization acquires and uses IT equipment. But there are other benefits. For example, if you tie your asset system to a help desk system, you can increase productivity, financial savings, and end- user satisfaction.

Say an end user calls the help desk with a PC problem. The support person can tap the asset database to find out what PC that user has and what software he or she is running. Because the user won't have to spend time describing his or her environment to the support person, the call will be shorter, and the user can go back to being productive sooner.

As a side note, if the problem and resolution are tracked with the piece of equipment or software causing the problem, help desk operators can check the problem list associated with that item and troubleshoot a new call more quickly. Also, you know what types of equipment cause the most problems, and you can use this information when evaluating the next round of purchases.

A good asset management system can also help when your organization is planning to migrate to another software environment or hardware platform. By checking what equipment and software is in use and where they are located, you can plan deployment better. For instance, you'll know which machines aren't ready for the new system and what upgrades you need to perform. By having this information ahead of time, you can minimize user downtime and frustration when you cut over to the new system.

Products On The Market

You can divide the asset management market into two rough categories: low-end building blocks and high-end multicomponent packages. However, no offering provides a total solution. Your final system will be a combination of product, policy, and hands-on effort.

In the building-block category, you'll find products such as inventory applications and tracking and metering programs. These tools help you build and populate your asset database. However, for the most part they are limited to querying workstations and servers for information on the equipment they house and software they run. They won't necessarily keep tabs on a switch or a hub.

The high-end packages typically provide you with a full-blown asset database. Usually, the database lets you track physical inventory, lease and contract information, and financial information on your assets. Many of these packages let you tie the asset system to a help desk component and, in some cases, to your organization's financial system. Some developers in this area are Peregrine Systems, Bendata, Tangram Enterprise Solutions, and Janus Technologies.

The Bottom Line

In "Asset Management, Part One" I explained several ways you can use asset data to benefit your organization. In the end, however, the main reason for implementing an asset management system and program is to gain control of IT costs and determine how your organization can spend its IT dollars more wisely. The bottom line is that every dollar your organization spends should help the organization reach its business goals.

Best Practices For Asset Management

To manage and reduce your organization's total cost of IT ownership, you can buy all the asset management technology you want, but without the appropriate policies and practices in place, you'll never reach your goal. Here are three asset management practices you should adopt in your organization.

1. Consistent acquisition. Standardizing on a finite set of hardware and software lets you minimize the number of variables you introduce into your IT environment, making it easier to manage, support, and evaluate your equipment.

2. Consistent configuration. Make sure you configure your equipment and software consistently. Similarly, consistent acquisition reduces the number of variables in your operating environment and makes management and support easier and less costly.

3. Consistent management. As problems appear in your IT environment, prioritize them and place those causing the biggest financial hits at the top of the list. That way, when you resolve these problems, you can realize more immediate financial returns (and look like a star in the process). Then, move to the smaller problems. Make sure you apply these solutions to similar setups within the organization.

Resources

Here are a few sites on the Web that contain white papers and other documents on IT asset management. In addition to visiting these sites, you can also go to your favorite search engine and search on the keyword phrase "IT asset management."

www.assettracking.com A site devoted to asset management and Y2K issues. It contains white papers on both topics, as well as links to other sites, articles, and resources on the Web.

www.metagroup.com/publicat.nsf/web+pages/asm A META Group article that contains several asset management case studies.

www.tallysys.com/tally/pubs/ A vendor site that contains a series of white papers on desktop asset management that covers issues such as PC inventory, Y2K issues, and software license management.

www.apsylog.com/justifying.html A vendor page that lists seven ways to cost-justify asset management.

www.assetpro.ca Click on the "Asset Management" link in the navigation bar when you get to this vendor site. You'll find a definition of asset management as well as a breakdown of the different processes it involves.

This tutorial, number 120, by Lee Chae, was originally published in the July 1998 issue of Network Magazine.